Proposed JV formation and co-operation agreement with CASIA
The Board is pleased to announce that (1) Shenzhen QNYN Network Technologies Co., Ltd.*(深圳 市千諾一諾網絡科技有限公司) or "Shenzhen QNYN”, an indirect wholly-owned subsidiary of the Company, and the JV Partners entered into the Investment Agreement in respect of the proposed formation of the Joint Venture; and (2) Leap Global, a direct wholly-owned subsidiary of the Company, and CASIA entered into the Co-operation Agreement in respect of (a) the CASIA License; and (b) the development of the New IP Rights.
Principal terms of the Investment Agreement and the Co-operation Agreement are set forth below:
(1) INVESTMENT AGREEMENT
Date: 6 September 2019
(a) Shenzhen QNYN; and
(b) the JV Partners
Purpose of the Joint Venture
Pursuant to the Investment Agreement, Shenzhen QNYN and the JV Partners agreed to establish the Joint Venture in the PRC for the purpose of engagement in the business of big data analysis and user behaviour pattern analysis, etc.
Upon establishment of the Joint Venture, it will become a non-wholly owned subsidiary of the Company and an “insignificant subsidiary” of the Company within the meaning of Chapter 14A of the Listing Rules. Hence, its financial results, assets and liabilities will be consolidated into the financial statements of the Group.
Registered Capital and Capital Commitment
Subject to adjustments set out below, the registered capital of the Joint Venture shall be RMB20,000,000, of which:
(a) Shenzhen QNYN
Shenzhen QNYN shall contribute RMB16,000,000 in cash, RMB8,000,000 of which shall be payable within 90 working days after the incorporation of the Joint Venture
(b) the JV Partners
CASIA Investment shall acquire from CASIA and contribute the Injected IP Rights (for itself and on behalf of Mr. Tao). 50% of the value of the Injected IP Rights will be registered as the paid-up capital of CASIA Investment and the remaining 50% will be registered as the paid-up capital of Mr. Tao.
The Injected IP Rights are not revenue generating. The value of the Injected IP Rights shall be subject to evaluation, which shall be completed within 6 months after the establishment of the Joint Venture. In the event the valuation is less than RMB4,000,000, the Injected IP Rights shall be deemed to be valued at RMB4,000,000 (“Minimum Valuation”). In the event the valuation is more than RMB5,000,000, the Injected IP Rights shall be deemed to be valued at RMB5,000,000 (“Maximum Valuation”).
In the event the valuation is more than the Minimum Valuation, the Joint Venture shall purchase the excess portion in cash, or Shenzhen QNYN shall increase its capital contribution (in cash) proportionally, such that the shareholdings of the Joint Venture shall be owned as to 80% by Shenzhen QNYN, and remaining each of 10% by each of the JV Partners. Based on the Maximum Valuation, the maximum amount of investment by Shenzhen QNYN in the registered capital of the Joint Venture will be RMB20,000,000.
For more information, please refer to the announcement of the company.